How to Avoid Paying Sales Tax on a Used Car?

When purchasing a vehicle, Indianapolis shoppers wonder how to avoid paying sales tax on a used car to save some money on their purchase. While most states do require you to pay sales tax on used cars, there are a few exemptions and strategies that might help you reduce or avoid these fees under certain circumstances. Understanding these options can make a big difference in the total cost of your vehicle. Let’s explore how you might be able to avoid or minimize the sales tax on used cars, including certified pre-owned vehicles. 

When Sales Tax on Used Cars Isn’t Required 

There are a few states that don’t charge sales tax on new or used cars, which include: 

• Alaska
• Delaware
• Montana
• New Hampshire
• Oregon

So, if you live in one of the states listed above, and plan to register your car in that state, you won’t have to pay sales tax. That being said, simply buying a car in a state that doesn’t charge sales tax won’t get you out of paying sales tax. If you’re planning to relocate to a state with no car sales tax, you can register your car in your new state of residency if you buy it within 90 days of moving. 

What Are Some Used Car Sales Tax Exemptions?

In some cases, used car sales tax exemptions are granted, even if a person lives in a state that requires over 7% sales tax, such as California or Nevada. Legal sales tax exemptions are as follows: 

• Vehicles that were made before 1973. They’re considered historic models. 
• Vehicles made for forestry and agriculture. 
• Certain individuals with a disability may qualify for a car sales tax exemption. 

If you do qualify for an exemption, make sure your exemption certification is displayed on your vehicle wherever you travel in  Delphi. 

Tax Credits for EVs Can Outweigh Sales Tax 

Purchasing an electric vehicle can help you save on taxes. Keep in mind that you can’t use those tax credits when you’re purchasing the car. You’ll earn the tax credits with ownership, which will help offset the cost of the EV. Before buying an electric vehicle, regardless of where you live in the  Frankfort area, make sure you’re aware of the rules and regulations involving federal and state tax credits for EVs. 

Learn More About Sales Tax on Used Cars at Lafayette Cadillac

Still curious about how to avoid paying sales tax on a used car or need more information about sales tax on used cars in Indiana? The experts at Lafayette Cadillac are here to help guide you through the process. We can help you understand your options and find ways to save on your next used vehicle purchase with our pre-owned vehicle specials. Contact us today to learn more about local tax laws, exemptions, and our current inventory of used cars.